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Securities
 9 Months Ended
Sep. 30, 2022
Securities [Abstract]  
Securities
Note 3 – Securities


Debt securities are classified into HTM and AFS categories.  HTM securities are those that CTBI has the positive intent and ability to hold to maturity and are reported at amortized cost.  AFS securities are those that CTBI may decide to sell if needed for liquidity, asset-liability management or other reasons.  AFS securities are reported at fair value, with unrealized gains or losses included as a separate component of equity, net of tax.  As of September 30, 2022 and December 31, 2021, CTBI had no HTM securities.


The amortized cost and fair value of debt securities at September 30, 2022 are summarized as follows:

Available-for-Sale

(in thousands)
  
Amortized
Cost
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Fair Value
  
U.S. Treasury and government agencies
  
$
441,216
    
$
272
    
$
(39,716
)
  
$
401,772
  
State and political subdivisions
    
326,248
      
12
      
(68,184
)
    
258,076
  
U.S. government sponsored agency mortgage-backed securities
    
626,731
      
2
      
(77,694
)
    
549,039
  
Asset-backed securities
    
92,674
      
0
      
(2,969
)
    
89,705
  
Total available-for-sale securities
  
$
1,486,869
    
$
286
    
$
(188,563
)
  
$
1,298,592
  


The amortized cost and fair value of debt securities at December 31, 2021 are summarized as follows:

Available-for-Sale

(in thousands)
  
Amortized
Cost
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Fair Value
  
U.S. Treasury and government agencies
  
$
299,606
    
$
351
    
$
(4,187
)
  
$
295,770
  
State and political subdivisions
    
334,218
      
5,524
      
(5,539
)
    
334,203
  
U.S. government sponsored agency mortgage-backed securities
    
733,467
      
5,107
      
(7,765
)
    
730,809
  
Asset-backed securities
    
94,538
      
301
      
(192
)
    
94,647
  
Total available-for-sale securities
  
$
1,461,829
    
$
11,283
    
$
(17,683
)
  
$
1,455,429
  



The amortized cost and fair value of debt securities at September 30, 2022 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 
Available-for-Sale
  
(in thousands)
  
Amortized Cost
    
Fair Value
  
Due in one year or less
  
$
38,956
    
$
38,386
  
Due after one through five years
    
238,514
      
219,227
  
Due after five through ten years
    
273,334
      
237,002
  
Due after ten years
    
216,660
      
165,233
  
U.S. government sponsored agency mortgage-backed securities
    
626,731
      
549,039
  
Asset-backed securities
    
92,674
      
89,705
  
Total debt securities
  
$
1,486,869
    
$
1,298,592
  


During the three months ended September 30, 2022, we had an unrealized loss of $159 thousand from the fair value adjustment of equity securities.  During the three months ended September 30, 2021, we had an unrealized loss of $62 thousand from the fair value adjustment of equity securities.


During the nine months ended September 30, 2022, we had a net securities loss of $285 thousand, consisting of a pre-tax loss of $1 thousand realized on calls of AFS securities and an unrealized loss of $284 thousand from the fair value adjustment of equity securities.  During the nine months ended September 30, 2021, we had a net securities gain of $50 thousand, consisting of a pre-tax gain of $62 thousand and a pre-tax loss of $2 thousand realized on sales and calls of AFS securities and an unrealized loss of $10 thousand from the fair value adjustment of equity securities.


Equity Securities at Fair Value


CTBI made the election permitted by ASC 321-10-35-2 to record its Visa Class B shares at fair value.  Equity securities at fair value as of September 30, 2022 were $2.0 million, as a result of a $159 thousand decrease in the fair value in the third quarter 2022.  The fair value of equity securities decreased $62 thousand in the third quarter 2021.  No equity securities were sold during the nine months ended September 30, 2022 and 2021.


The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $584.8 million at September 30, 2022 and $545.6 million at December 31, 2021.


The amortized cost of securities sold under agreements to repurchase amounted to $306.6 million at September 30, 2022 and $314.1 million at December 31, 2021.


CTBI evaluates its investment portfolio on a quarterly basis for impairment.  The analysis performed as of September 30, 2022 indicates that all impairment is considered temporary, market and interest rate driven, and not credit-related.  The percentage of total debt securities with unrealized losses as of September 30, 2022 was 97.2% compared to 72.4% as of December 31, 2021.  The following table provides the amortized cost, gross unrealized losses, and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of September 30, 2022 that are not deemed to have credit losses.  As stated above, CTBI had no HTM securities as of September 30, 2022.

Available-for-Sale

(in thousands)
  
Amortized
Cost
    
Gross
Unrealized
Losses
    
Fair Value
  
Less Than 12 Months
                  
U.S. Treasury and government agencies
  
$
174,884
    
$
(9,685
)
  
$
165,199
  
State and political subdivisions
    
138,322
      
(19,957
)
    
118,365
  
U.S. government sponsored agency mortgage-backed securities
    
191,768
      
(11,796
)
    
179,972
  
Asset-backed securities
    
47,343
      
(1,439
)
    
45,904
  
Total <12 months temporarily impaired AFS securities
    
552,317
      
(42,877
)
    
509,440
  
                         
12 Months or More
                        
U.S. Treasury and government agencies
    
234,630
      
(30,031
)
    
204,599
  
State and political subdivisions
    
184,173
      
(48,227
)
    
135,946
  
U.S. government sponsored agency mortgage-backed securities
    
434,704
      
(65,898
)
    
368,806
  
Asset-backed securities
    
45,331
      
(1,530
)
    
43,801
  
Total ≥12 months temporarily impaired AFS securities
    
898,838
      
(145,686
)
    
753,152
  
                         
Total
                        
U.S. Treasury and government agencies
    
409,514
      
(39,716
)
    
369,798
  
State and political subdivisions
    
322,495
      
(68,184
)
    
254,311
  
U.S. government sponsored agency mortgage-backed securities
    
626,472
      
(77,694
)
    
548,778
  
Asset-backed securities
    
92,674
      
(2,969
)
    
89,705
  
Total temporarily impaired AFS securities
  
$
1,451,155
    
$
(188,563
)
  
$
1,262,592
  


The analysis performed as of December 31, 2021 indicated that all impairment was considered temporary, market and interest rate driven, and not credit-related.  The following table provides the amortized cost, gross unrealized losses, and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of December 31, 2021 that are not deemed to be other-than-temporarily impaired.  As stated above, CTBI had no HTM securities as of December 31, 2021.

Available-for-Sale

(in thousands)
  
Amortized
Cost
    
Gross
Unrealized
Losses
    
Fair Value
  
Less Than 12 Months
                  
U.S. Treasury and government agencies
  
$
249,990
    
$
(4,123
)
  
$
245,867
  
State and political subdivisions
    
197,592
      
(4,779
)
    
192,813
  
U.S. government sponsored agency mortgage-backed securities
    
473,831
      
(6,759
)
    
467,072
  
Asset-backed securities
    
52,229
      
(190
)
    
52,039
  
Total <12 months temporarily impaired AFS securities
    
973,642
      
(15,851
)
    
957,791
  
                         
12 Months or More
                        
U.S. Treasury and government agencies
    
14,505
      
(64
)
    
14,441
  
State and political subdivisions
    
19,126
      
(760
)
    
18,366
  
U.S. government sponsored agency mortgage-backed securities
    
62,330
      
(1,006
)
    
61,324
  
Asset-backed securities
    
1,368
      
(2
)
    
1,366
  
Total ≥12 months temporarily impaired AFS securities
    
97,329
      
(1,832
)
    
95,497
  
                         
Total
                        
U.S. Treasury and government agencies
    
264,495
      
(4,187
)
    
260,308
  
State and political subdivisions
    
216,718
      
(5,539
)
    
211,179
  
U.S. government sponsored agency mortgage-backed securities
    
536,161
      
(7,765
)
    
528,396
  
Asset-backed securities
    
53,597
      
(192
)
    
53,405
  
Total temporarily impaired AFS securities
  
$
1,070,971
    
$
(17,683
)
  
$
1,053,288
  

U.S. Treasury and Government Agencies


The unrealized losses in U.S. Treasury and government agencies were caused by interest rate changes.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity.  CTBI does not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost.

State and Political Subdivisions


The unrealized losses in securities of state and political subdivisions were caused by interest rate changes.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity.  CTBI does not intend to sell the investments before recovery of their amortized cost and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost.

U.S. Government Sponsored Agency Mortgage-Backed Securities


The unrealized losses in U.S. government sponsored agency mortgage-backed securities were caused by interest rate changes.  CTBI expects to recover the amortized cost basis over the term of the securities.  CTBI does not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost.

Asset-Backed Securities


The unrealized losses in asset-backed securities were caused by interest rate changes.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity.  CTBI does not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost.